US private equity investment picks up; British judge upholds retirement limit; Asia-Pacific pension funds rise in global rankings; Brazil amends rules on pension investments
US private equity funds see pick up in investing At Dow Jones's Private Equity Analyst Conference held in New York in September, discussion panels focused on new fundraising and debated where investment firms and bankers can seek out returns in a vastly changed financial landscape. KPS Capital Partners managing partner and co-founder Michael Psaros said it was hard to commit capital in the current environment. "Unprecedented uncertainty makes it hard for private equity to invest and banks to spend," Psaros said. Looking ahead, he said he saw "deep capital" available in Australia, Japan and Europe. He said large pension funds in those markets, which had traditionally shied away from alternative assets, were now reviewing alternatives. "They don't have liquidity issues, so there's a real market there," he said.
Asia-Pacific pensions rise in global asset rankings Asia-Pacific pension funds have closed the gap with North America, according to a survey published in September by Watson Wyatt and United States-based publication Pensions & Investments. The report, which ranked the world's top 300 pension funds based on assets, said eight Asian pension funds - including five sovereign funds - made the global top 20 in 2008, with the combined assets accounting for half of the top 20 total. Watson Wyatt head of investment consulting for Asia-Pacific Naomi Denning said the more conservative asset allocation maintained by Asian pension funds reduced their exposure to the global financial crisis. High asset growth has pushed the Asia-Pacific region with US$3 trillion ($3.46 trillion) ahead of Europe with US$2.5 trillion ($2.9 trillion), while the US still leads with US$4.7 trillion ($5.4 trillion). Taiwanese pension assets grew at the fastest rate over the five-year period through 2008 (by 14 per cent) followed by Australia (13 per cent).
UK's Pensions Corporation seeks acquisitions Pensions Corporation is looking at potential buyout opportunities in the United Kingdom pensions sector as large pension schemes seek an out from their parent companies. Speaking to the UK's Sunday Telegraph, Pensions Corporation founder Edmund Truell said he was seeing increased interest from trustees and sponsors in moving risk out of their pension fund. "There is an opportunity for us to gain scale by taking on the secondary books of those no longer writing business," Truell said. The firm provides risk management solutions to defined benefit pensions with liabilities of £4.4 billion ($8.1 billion) and upwards.
Pension Quality Mark introduced in UK The National Association of Pension Funds (NAPF) in the United Kingdom will introduce a Pension Quality Mark (PQM) to rate British pension funds that meet with set criteria. As a number of British companies close final-salary schemes, new employees will be faced with a new set of pension choices mainly built around defined contributions and the NAPF scheme aims to make those options more transparent and attractive. To receive the PQM, companies will have to meet key criteria on contribution rates, including an employer contribution of at least 6 per cent - double the 2012 3 per cent statutory minimum - with a 10 per cent minimum employee salary invested. Among the first of seven companies to receive the PQM on 21 September were Marks & Spencer and Kellogg's.
British judge upholds retirement limit A British judge has upheld a 2006 ruling that allows employers in the United Kingdom to retire workers at 65. The ruling had been the subject of a court battle initiated three years ago by Age Concern and Help the Aged, which argued the law breached a European Union (EU) equal treatment work directive and allowed employers to discriminate based on age. Justice Blake found the ruling did not breach EU regulations but stated the arguments for increasing the age appeared compelling. The British government has brought forward a review of the default retirement age to next year.
Ford Canada addresses pension shortfall Ford Canada is asking its workers to make pension concessions to deal with an estimated pension shortfall of C$1.8 billion ($1.9 billion). Neither Ford Canada nor its United States parent, Ford Motor, sought government bailout funds last year, but Ford is asking the Canadian Auto Workers Union to make similar concessions agreed with General Motors and Chrysler, both recipients of bailout money. In a letter to employees, reported by Canada's Globe and Mail newspaper, the Ford pension plan held assets of C$2.91 billion ($3.07 billion) as of December 2008, which will cover just 62 per cent of its liabilities if the plan is wound up.
Brazil amends rules on pension investments Brazil's government has amended limits on investments by the country's closed pension funds, allowing for more diversification and increased exposure to international markets, Business News Americas has reported. Now the funds may invest up to 70 per cent of assets in equities, up from 50 per cent previously, but equity investments will be limited to companies listed on Brazil's domestic market.
